If you’re like most Americans, you probably have never paused to ponder what could happen to your business and loved ones when you die. According to a study carried out by Harris Interactive®, 55% of Americans do not have a will. Unlike years ago, when estate planning was considered a practice reserved for billionaires, it’s now one of the most important decisions you can ever make in your life.
Estate planning is not just about choosing who will inherit and manage your estate when you pass on. Instead, it involves a wide range of things such as future financial/business plans, health care directives, proper document storage, funeral expenses, guardianship of minors, organ donation decisions, investing in life insurance policies and many more. These are important decisions that should be addressed sooner rather than later. That being said, here are some of the reasons why estate planning is a valuable part of planning for the unknown future ahead.
Taking Care of Your Loved Ones
Death can be cruel but it’s inevitable and will occur to each one of us at some point. Have you thought about what could happen to your loved ones when you’re gone, especially if they’re still minors? This is where estate planning comes into play. Estate planning can give you peace of mind knowing very well that your children and loved ones have arrangements in place for when you’re gone. Through estate planning, you can stipulate how your wealth will be divided, how your loved ones will be taken care of, and how your business will operate after your passing. By doing this, you’ll avoid scenarios where your loved ones battle it out in court to control your estate.
To Help Your Heirs Avoid Overpaying Taxes
Keep in mind that a lot of money is likely to be lost to federal estate taxes and state inheritance taxes if you do not leave a proper estate plan in place. Putting a proper estate plan in place can help you minimize estate taxes. For instance, estate planning can help you avoid many loopholes that would otherwise affect your heirs if there’s no estate planning in place.
Protect Your Estate from Unforeseen Creditors
Protecting your assets is a crucial component of estate planning. Having one in place can help protect your assets from lawsuits that may come up in the future. In other words, you can help protect your assets from creditors who may look to seize your properties in the future to pay off debts.
Becoming incapacitated as a result of a physical accident or mental illness can leave you in a precarious position if you do not have a proper estate plan in place. In such events, even your family members may not have the legal right to pay your bills and expenses through your assets. They may also be unable to execute important documents on your behalf, which can be detrimental in certain instances. The only way to avoid such unpleasant scenarios is through estate planning.
One of the most prevalent financial misconceptions is that estate planning is for the wealthy. Most middle class and marginally wealthy individuals often ignore estate planning. They mistakenly think that they have plenty of time or that their loved ones will carry out their wishes when they pass on. Unfortunately, lacking an estate plan can leave you, your loved ones, and your assets in a precarious position. It’s, therefore, important to have an estate plan in place early on, before it is too late and your entire estate falls victim to a lack of order.
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